When the SBA issued its final rule concerning its new Small Business Mentor Protégé Programs, it adopted a major change for 8(a) and small business joint ventures:  no more populated joint ventures. Instead, the rule provides that where a joint venture is formed as a separate legal entity, like a limited liability company, it may not have its own separate employees to perform contracts awarded to the joint venture.

By Megan Connor, Partner PilieroMazz

For contractors well-versed in the National Industrial Security Program Operating Manual (“NISPOM”) and who otherwise pursue and perform cleared contracts, the SBA’s move away from populated joint ventures in favor of unpopulated joint ventures raises some eyebrows. A joint venture without any personnel of its own cannot obtain a facility clearance (“FCL”) because an FCL always depends on the personnel security clearance (“PCL”) of the company’s key management personnel, including the facility security officer (“FSO”). In other words, the only way a contractor receives an FCL is if it has cleared employees.So how, then, can a small business comply with the SBA’s regulations requirement for an unpopulated joint venture (if a separate legal entity) and the requirements of Defense Security Service and NISPOM?

By “populating” the joint venture with administrative personnel. This is expressly allowed under SBA’s regulations. While the SBA does not want separate legal entity joint ventures populated with direct labor, the regulations expressly allow a joint venture to have “its own separate employees to perform administrative functions.”  13 C.F.R. § 121.103(h). Thus, a joint venture may be populated with employees and still be considered an unpopulated joint venture so long as these employees are not performing the contracts awarded to the joint venture.

The administrative personnel employed by an unpopulated joint venture can be the individuals upon whom the joint venture’s FCL is based. For instance, the joint venture could employ a single management position, the FSO, and the joint venture’s FCL would be contingent on the FSO’s PCL. Although the NISPOM requires the FSO tobe an employee of the cleared entity, there is no requirement for the FSO to be a full-time employee, so the FSO could split his time as the FSO of the joint venture and as the FSO of one of the venturers. The FSO could not perform direct labor on the joint venture’s contracts, but could (and should) be performing administrative functions, like supervising the joint venture’s compliance with the NISPOM and maintaining the joint venture’s records in the Joint Personnel Adjudication System.

____________________________________________________________________________________________Megan Connor is a partner with PilieroMazza and focuses her practice in the areas of government contracts, small business administration programs, business and corporate law, and litigation.  She may be reached at mconnor@pilieromazza.com.

For all women business owners who have secured, or are seeking federal contracts, the first order of business is remembering the incredible effort it took to get the Women-Owned Small Business Procurement Program in place. WIPP and thousands of women across the country pushed for this program and as a result, today women are awarded

Anne Sullivan, WIPP Chief Advocate

nearly $18 billion in contracts through the program. As part of that 13-year effort, I have had the privilege to gain insights on successful strategies.

Last month, the Department of Treasury held a women’s history month event organized by Lisa Jenkins, who heads the small business office and is an incredible advocate for women-owned businesses. I thought I would share my five tips for being successful in the federal marketplace I presented at the event. PS: If you do not know Lisa Jenkins, make it your business to do so.

Since the federal government just received its FY18 money, expect spending to be fast and furious until the end of the fiscal year—September 30. Think about the strategies you have in place to respond to a myriad of requests for information and Sources Sought notices. Remember to ask agencies to consider setting aside the contract for women-owned companies and familiarize yourself with the WOSB sole source rules.

FIVE TIPS

1. Know more than the person you are meeting with.

Dig deep—read the Small Business part of the FAR (https://www.acquisition.gov/far/html/FARTOCP19.html) and all the government contracting articles/news. you can get your hands on. Look up WIPP’s Give Me Five http://www.giveme5.com program and take classes that are applicable to building your knowledge base. Look up the agency’s FY18 funding and understand their focus (Give Me Five: Follow the Money Webinar).

2. Seek to establish relationships in unconventional ways—go to events where the person you are trying to meet is speaking and get creative about getting an introduction to them through your networks. Follow them on social media. Only ask for meetings when you have all your ducks in a row and you have a specific ask.
3. Join organizations that work with agencies and become a leader. It is not enough to join an organization at the lowest level. The real benefit comes from being a leader. Organizations feature their leaders, give them opportunities to introduce speakers and assist their leaders in connections that are helpful in the federal contracting arena.
4. Learn how to use the SBA set-aside programs, such as the WOSB procurement program and be prepared to educate agency contracting officers on the benefits of using the program. Don’t be offended that contracting officers don’t know your program—you can be the educator. That’s a good place to be.

Understand the budget process—it’s all public information. Know how your programs are funded. Look up the agency’s funding and understand their focus (Check out Give Me Five: Follow the Money Webinar). Although this can be complicated, understanding this process and using it to your advantage will give you a huge leg up on the competition.